The market consensus is that Road Runner Industries has an ROE = 10%, a beta of 1.3, and plans to maintain indefinitely its traditional plowback ratio of 75%. This years earnings were $4 per share. The annual dividend was just paid. The consensus estimate of the coming years market return is 14%, and T-bills currently offer a 5% return. a. What is the intrinsic value of a share of Road Runner stock. b. Calculate the P/E ratio.

c. Calculate the present value of growth opportunities